Lengthy Prison Terms for Lucchese Crime Family Members

In a world inhabited by
international cyber criminals and violent terrorists, it would be easy to think
of La Cosa Nostra—the Mafia—as a throwback to a bygone era. But a recent New
Jersey case involving the Lucchese crime family is proof that traditional
organized crime can still be a potent threat.

Members and associates of the
Lucchese organized crime family—one of the families traditionally associated
with La Cosa Nostra (LCN)—were recently sentenced to lengthy prison terms in
New Jersey for a financial fraud scheme that illegally netted millions of
dollars.

Nicodemo “Nicky” Scarfo, Jr.,
whose imprisoned father was an LCN crime boss in Philadelphia, was sentenced in
July to 30 years in prison for racketeering, securities and wire fraud, and
other charges related to the 2007 illegal takeover of FirstPlus Financial Group
Inc. (FPFG), a publicly held company in Texas. His associate, Salvatore
Pelullo, also received a 30-year term. Brothers William and John Maxwell
received 20- and 10-year terms, respectively.

“Essentially, Scarfo and Pelullo
used extortion and other illegal means to gain control of the company,” said
Special Agent Joe Gilson, who investigated the case from the FBI’s Atlantic
City Resident Agency in New Jersey. “And then they systematically looted the
company.”

FPFG, once a billion-dollar
financial organization that specialized in mortgages, had filed for bankruptcy.
The company was dormant, said Special Agent Bill Hyland, who assisted in the
investigation, “but still had assets, thanks to the continued proceeds from all
the mortgages it had financed.”

In 2007, Pelullo and Scarfo used
threats and other tactics to intimidate and remove FPFG’s management and board
of directors. They were replaced with Mafia associates, including the Maxwell
brothers—William was named special counsel to FPFG, while John became the
company’s CEO.

“Within several weeks of gaining
control,” Gilson said, “Pelullo and Scarfo had lined their pockets with $7
million. Before they were arrested in 2011, more than $12 million was illegally
funneled to them—money that rightfully belonged to the company’s stockholders.

The investigation revealed that
between 2007 and 2008, Scarfo received $33,000 per month from FPFG as a
“consultant”—at a time when he was on home detention in New Jersey for
violating his parole from a previous conviction. The money was being paid to a
shell company controlled by Scarfo. Pelullo, using a different shell company,
had a similar deal. With their ill-gotten gains, the mobsters purchased an
airplane, a yacht, and expensive jewelry.

“Complicated financial crimes are
not normally the strong suit of LCN,” Gilson noted. But Pelullo, who had two
previous federal fraud convictions, “was a persuasive con man. He could
maintain an air of legitimacy, but behind the scenes everything was a fraud.”

Using a variety of investigative
techniques, including a court-ordered wiretap (monitored by retired FBI agents,
some of whom had helped put Scarfo’s father behind bars), investigators
unraveled the scam with the help of federal partners including the Department
of Labor and the Bureau of Alcohol, Tobacco, Firearms, and Explosives. During
the more than five-year investigation, a million pages of paper documents were
analyzed and the contents of more than 100 computers were searched.

Scarfo, Pelullo, the Maxwells,
and others associated with the fraud were convicted in 2014. “We feel great
that our team was able to put a stop to these crimes and bring the subjects to
justice,” Gilson said. “The FBI remains vigilant against all types of organized
crime, including LCN.”